Canada has a love affair with the crypto sphere that may well get tested if proposed regulations become a reality. In a month where the Canadian crypto markets produced a considerable spike in volume, hitting fresh all-time highs for the amount of bitcoins traded for CAD on Localbitcoins, Canadian crypto investors and traders look set to be subjected to a heightened level of market surveillance in the very near future, should the Canadian government get its own way.
Recently, the Canadian government released an official draft of proposed regulations on crypto exchanges and payment processors. The new regulations are being put into place in an attempt to address a “number of deficiencies” that the Financial Action Task Force (FATF) highlighted in their 2015/16 evaluation. The regulations are designed to strengthen Canada’s Anti-Money Laundering and Anti-Terrorist Financing Regime (AML/ATF), an intergovernmental organization that develops policies to combat money laundering. However, the Canadian government admitted that the proposed regulatory changes could result in a loss of $60 million over the next decade for firms that trade in cryptocurrencies.
With a consultation period consisting of 90 days, the ever growing crypto business community in Canada still has to fully asses the impact that the new regulations will bring but already words like “significant” and “massive” are being bandied around.
Amber D. Scott, CEO of Outlier Solutions, a firm which helps crypto and blockchain startups said:
“If the definitions are broadly interpreted, there could be significant dislocation in both the cryptocurrencies and blockchain communities that were not expecting to be regulated in this way. This includes any blockchain company that has issued, sold or traded a token that fits within the definition of ‘virtual currency.’”
The new regulations will require businesses to maintain detailed records of users, report every transaction over $10,000, undergo risk assessments and inform the Canadian government of any suspicious activities or transactions.
After the 90 day consultation period, the Department of Finance will redraft and publish the final version. After that, there is a 12 month transition period to enable compliance. All in all, the regulation will take effect in a a minimum of 15 months time and no serious or meaningful challenge is expected to come from the crypto community.
The aim of the regulation, as well as to boost the Anti-Money Laundering policies is to present Canada as the safest and most secure country to trade virtual currencies. The Canadian government hopes that this will attract further investment and Canada will be a world leader in the crypto sphere
